The liberal Citizens for Tax Justice has sounded the alarm, GOP House and Senate leaders held a press conference Wednesday, trying to isolate Obama, and suddenly it's 2010 all over again and Dems are about to cave on demanding that the Bush tax cuts for high earners expire.
Except the catalytic moment here never really happened. What happened instead is a case study in how it's easier for journalists to slot news developments into simple, pre-existing narratives -- Bill Clinton is stealing Barack Obama's thunder again -- than to do the heavy-lifting of understanding and translating substantive policy debates.
So here's what really happened.
At the beginning of 2013, several massive fiscal policy shifts will occur automatically. Absent congressional action, all of the Bush tax cuts will expire, and deep cuts to federal programs -- domestic and national security programs alike -- will take effect across the board. Other tax and spending provisions are expiring as well, but these are the two biggest.
Why this is all happening at once is another matter, and a long story. Suffice to say, the combined effect over 10 years amounts to trillions of dollars in budget consolidation. More importantly, though, it would cause a massive economic contraction when unemployment is already high, economic growth is weak, and most economists think the government shouldn't pursue immediate, severe deficit reduction.
Avoiding this so-called "fiscal cliff" is thus a top priority for policymakers of both parties. So is devising legislative strategy to maximize each individual party's chances of using the cliff to make major ideological advancements. For the Republicans, this means making the Bush tax cuts permanent; for the Democrats it means breaking the GOP's anti-tax absolutism, and drawing down future budget deficits with both higher taxes and lower spending, without making radical changes to safety net programs.
Enter Bill Clinton. Here's his exchange with Maria Bartiromo.
CLINTON: [W]hat I think we need to do is to-- find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long-term debt reduction plan as soon as they can, which presumably will be after the election.
BARTIROMO: So does that mean extending the tax cuts?
CLINTON: Well, I think what it means is they will have extend--they will probably have to put everything off until early next year That's probably the best thing to do right now. But the Republicans don't want to do that unless he agrees to extend the tax cuts permanently, including for upper income people.
And I don't think the president should do that. That's going to--that's what they're fighting about. I don't have any problem with extending all of it now, including the current spending level....The real issue is not whether they should be extended for another few months. The real issue is whether the price the Republican House will put on that extension is the permanent extension of the tax cuts, which I think is an error.
Emphasis mine. To the uninitiated, this sounds like a cave. But it's actually the prevailing school of thought on Capitol Hill. There just won't be enough time between the election and the New Year to address all of these issues, so Congress may just extend its own deadline until early 2013 to avoid severe economic recriminations. Rep. Chris Van Hollen (D-MD) has suggested as much, as has Rep. Paul Ryan (R-WI) -- the top House Dem and GOP budget guys.
Of course, Republicans would like to force Democrats to permanently extend all of the Bush tax cuts before they expire, and to accomplish that they may threaten to let them all lapse, just like they did in 2010. But that's a question of strategy, not policy, and whether that happens in January or March is sort of beside the substantive point.
Clinton's saying the smart thing for Congress to do would be to buy time to avoid the entire fiscal cliff in a considered, rational way. That's actually a consensus view. The fact that Democrats think it's the wisest course of action doesn't suggest they're breaking with the White House on the Bush tax cuts anymore than Paul Ryan supports current spending on domestic programs.
It's all pretty straightforward, but you'd never know it from the coverage. Instead we have yet another story about Bill Clinton undercutting Obama's message and strategy.